US greenlights Exxon-Pioneer deal, alleges shale founder colluded with OPEC

Former Pioneer CEO Scott Sheffield coordinated efforts with U.S. shale oil producers to constrain their output production and raise energy prices, the Federal Trade Commission alleged. Widely considered the dean of U.S. shale because of his long tenure and blunt comments on industry output and spending, Sheffield used his influence "to align oil production across the Permian Basin in West Texas and New Mexico with OPEC+," the FTC claimed.

U.S. regulators on Thursday gave the go-ahead to Exxon Mobil's $60 billion purchase of Pioneer Natural Resources, but barred Pioneer's former CEO from Exxon's board on allegations he attempted to collude with OPEC to raise oil prices. Former Pioneer CEO Scott Sheffield coordinated efforts with U.S. shale oil producers to constrain their output production and raise energy prices, the Federal Trade Commission alleged.

Widely considered the dean of U.S. shale because of his long tenure and blunt comments on industry output and spending, Sheffield used his influence "to align oil production across the Permian Basin in West Texas and New Mexico with OPEC+," the FTC claimed. “Mr. Sheffield’s past conduct makes it crystal clear that he should be nowhere near Exxon’s boardroom," said Kyle Mach, deputy director of the FTC’s Bureau of Competition.

When asked whether the FTC was referring the collusion allegations to the U.S. Department of Justice for further investigation, a FTC spokesperson said only: “The FTC has a responsibility to refer potentially criminal behavior and takes that obligation very seriously.” The DOJ did not immediately reply to a request for comment.

Exxon said it plans to close the Pioneer purchase on Friday. It will become the largest oil producer in the Permian Basin of West Texas and New Mexico, doubling output to more than 1.3 million barrels of oil equivalent per day (boepd). Its shares were up a fraction at $116.20 in afternoon trading.

The FTC consent is a relief for several other energy company mergers under antitrust reviews. The regulator has delayed multibillion-dollar energy deals involving Chevron, Diamondback Energy, Occidental Petroleum, and Chesapeake Energy with requests for additional information. The agreement will also free Exxon to focus on a dispute with rival Chevron over its proposed acquisition of Hess Corp, which owns a 30% stake in a prized Exxon joint venture in Guyana.

Pioneer said it was "surprised" by the FTC’s complaint but wanted the deal to close. Its former CEO's comments on the industry were "matters of public interest" and should not disqualify him from a board seat, a spokesperson said. Sheffield was a regular speaker at energy investor and industry conferences whose pronouncements on OPEC production cuts and oil price trends were widely quoted.

The FTC complaint pointed to some of his remarks on the dangers of higher shale output as part of a "coordinated output reduction scheme" that threatened companies which did not restrain their production gains. Exxon said it will not add Sheffield to its board. It learned of the collusion allegations during the antitrust review, but the lengthy FTC investigation "raised no concerns with our business practices," a spokesperson said.

SHALE - OPEC TALKS FTC says collaboration between OPEC and American oil firms would lead to production growth rates below what would typically be observed in a competitive market, sending energy prices up.

Sheffield was among the executives who attended near-annual dinners with OPEC members at a Houston energy conference. The private get-togethers began late last decade with invitations to Sheffield and others by OPEC's late Secretary General Mohammed Barkindo. OPEC had failed to halt U.S. shale's rapid market share gains, and its members were surprised at how quickly U.S. companies were able to recover after a punishing oil-price war that spanned 2014 through 2016. The war ended when OPEC curbed its production and prices rebounded.

CERAWeek energy conference dinner attendees at times included shale executives John Hess, Vicki Hollub, Rick Muncrief, and Domenic Dell'Osso. They would generally discuss the oil market, spare capacity, oil demand and shareholders' expectation for returns, some attendees have said. Sheffield told Reuters during a March 2023 interview on OPEC de facto leader Saudi Aramco's interest in developing its domestic shale reserves that his company twice hosted officials and explained the company's operations and business practices.

Pioneer said on Thursday Sheffield had "neither the intent nor an effect of his communications to circumvent the laws and principles protecting market competition."

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)